January 27, 2023

With a Solid Hit, CBS Breaks the Summer Ratings Mold

Borrowing heavily from the cable playbook, CBS has set out to reverse the trend toward ever-dwindling network ratings — and intense attention directed toward cable dramas — in the summer. In its new series, “Under the Dome,” CBS may have done it.

The opening ratings for “Dome” last Monday qualified as spectacular: more than 13.5 million viewers for the premiere, the biggest audience for a summer drama in more than 20 years. The show added more than three million more viewers when three days of delayed viewing was counted, CBS announced Saturday.

Maintaining numbers like that could mean significant profits for CBS, which created a can’t-miss formula for financing the show that included a presale of the episodes for streaming on Amazon Prime, and now may expect a surge in spending from advertisers looking to reach summer consumers at the same time.

Even more important, CBS’s executives are so encouraged by the early ratings results that they foresee the potential “to create a whole new model for summer programming” said David F. Poltrack, the network’s chief research executive.

That model relies on some traditional network advantages. “One of the things the premiere’s ratings illustrated was the power of network television as a marketing medium,” Mr. Poltrack said. CBS began promoting “Dome” during the spring in its highly rated shows.

But the model is also new for CBS because, in this case, it includes such elements as a highly serialized plotline with science-fiction elements and characters who would not qualify as traditionally likable heroes on the networks.

Those have been among the drama conventions on cable for years, where such shows as “Mad Men” and “Breaking Bad” on AMC, “Burn Notice” on USA and “True Blood” on HBO have played in the summer. This summer, the cable networks have a full roster of prominent dramas, including “The Newsroom” on HBO, “Ray Donovan” on Showtime and “The Bridge” on FX.

But none of them are likely to come within 10 million viewers of “Under the Dome.” And this is only the first salvo in a network strategy to retake some summer territory. Already numerous projects are in the works at other networks, including shows called “limited series” on ABC, like “Resurrection,” (a town is shaken by the return of long-dead relatives) and “event series” on the Fox network, including the resumption of the action hit “24” and a “Twin Peaks”-style suspense series called “Wayward Pines.”

The last two are being prepared for summer 2014, part of an ambitious effort by Kevin Reilly, the chairman of entertainment for Fox, to shake up the scheduling paradigm that has dominated network television.

“The networks have to stop losing viewers,” said Brad Adgate, the senior vice president for research at Horizon Media. “After the season they just had they can’t afford to lose any more.”

Mr. Reilly at Fox has been saying for several years that it makes no sense for network television to keep doing the same thing year after year even as its audiences shrivel. He announced this spring that Fox would invest heavily in short-run series with high production values and A-list casts. (“Wayward Pines” has already cast Matt Dillon and Melissa Leo.)

But CBS, the network that for years resisted the concept of the serial drama, planted its flag first. “Under the Dome,” an adaptation of a Stephen King novel, was conceived as a cable entry, developed by Showtime. When that network passed, CBS (which owns Showtime) picked up the project specifically intending to reinvigorate a deteriorating summer schedule.

Networks have tried to improvise in summer, spreading a few reality shows around a diet of repeats. But this summer, reality regulars like “America’s Got Talent” on NBC and “Big Brother” on CBS have experienced early ratings erosion. “Those shows are showing the same fatigue that affected ‘American Idol’ in the regular TV season,” Mr. Adgate said.

“Viewing habits have changed,” said Jeff Gaspin, the former head of NBC Entertainment who also oversaw cable networks like USA. “Broadcasters started programming summer years ago because of cable inroads. They mostly tried weak scripted content and ultimately settled on nonscripted.”

Article source: http://www.nytimes.com/2013/07/01/business/media/with-a-solid-hit-cbs-breaks-the-summer-ratings-mold.html?partner=rss&emc=rss

Wealth Matters: For a Fee, Seeking Owners of Unclaimed Money

His father had kept meticulous records, Mr. Sinclair said, and little had changed since his death several years earlier. Mr. Sinclair and his two siblings were also skeptical of the fee the company, Legal Claimant Services, a division of Keane, was seeking: 36 percent of the account’s value.

But this spring, Mr. Sinclair said, Keane told them the unclaimed money was $148,400 in stock. He and other family members decided they needed to account for everything so they could finally close their mother’s estate. At $1.5 million, it was small by federal standards but large enough to owe Ohio estate taxes. So on May 24, Mr. Sinclair, as the executor, signed a contract with Keane to get details on the unknown account for a 25 percent fee.

“Within a matter of days, I got a letter from them detailing what they had found, right down to the numbers on the stock certificates,” he said. “My stomach fell out of my body. I e-mailed them back and said, ‘This is stock we’ve always been aware of, and you didn’t find it.’ ”

The stock, for First Bancorporation of Ohio, which is now part of FirstMerit Bank, was in his mother’s safe deposit box, where it had been for years, he said. Nonetheless, Keane still expected its $37,100 fee.

Stephen Lochner, a representative for Keane, wrote in e-mails shown to The New York Times that the company had based its claim on the fact that $11,400 in dividend checks on the stock had never been cashed. “Please realize that knowledge of the asset or possession of shares doesn’t take away the fact the account is dormant, needs attention and subject to abandoned property laws of the state,” Mr. Lochner wrote.

“If you wish to retain the account, I can provide an updated set of documents for you to complete,” he added. “The revised documents will give you the option to retain most of this account and we can update the address and registration.”

When Mr. Sinclair balked at a fee being charged on the whole account — and not the dividend check, which he admits he did not know about — Mr. Lochner suggested Keane’s general counsel talk to Mr. Sinclair’s lawyer. The company contends the contract is clear about the basis for the fee. The two sides have been locked in a legal dispute, which only this week seemed headed toward a resolution.

It may strain credulity that a company could charge a fee for saying it found something in a person’s safe deposit box. But the amount of unclaimed property in the United States is rising and so, too, is the pressure on companies to find owners of dormant accounts. This has given rise to locator companies that look for account owners and often charge them a fee for informing them about an account.

The National Association of Unclaimed Property Administrators, the membership organization of state unclaimed property offices, estimated that $41.7 billion is sitting in state coffers, where it goes if it has been unclaimed after a period of years. But the amount of unclaimed property that has not reached that point is certainly higher. (In 2011, only $2.25 billion in 2.5 million claims went back to people.)

Common types of unclaimed money include paychecks, utility deposits and life insurance policies as well as bank, 401(k) and brokerage accounts.

Kristina Koutrakos, a managing director at Manchester Capital, which manages money for people with $10 million to $400 million in assets, said that when new clients came to the firm, 30 percent of the time, they had forgotten about some asset. A separate 30 percent of the time — albeit with some overlap — her company finds property that clients never knew they had.

“We’ve found all kinds of stuff, from a $15 stock certificate to 25 acres of land in North Carolina,” she said. “People lose 401(k)’s if they’ve moved around a lot. They forget about stock options or old country club investments.”

Manchester does not charge its clients an additional fee for the search, only a fee to manage money.

Article source: http://www.nytimes.com/2013/06/22/your-money/seeking-owners-of-unclaimed-money-for-a-fee.html?partner=rss&emc=rss

Disruptions: How Deal Makers Put a Value on Start-Ups

Otis Chandler and his wife, Elizabeth Khuri Chandler, the founders of Goodreads, a social media site that recently sold for a reported $150 million.Annie Tritt for The New York Times Otis Chandler and his wife, Elizabeth Khuri Chandler, the founders of Goodreads, a social media site that recently sold for a reported $150 million.

I have a vision of how suitors decide how much to offer for a start-up they want to buy. Several executives go into a conference room. Each scribbles a number on a piece of paper and places it in a hat. Then the chief executive pulls out a number, and there it is.

It might sound like a stretch, but given the seemingly random and sometimes nonsensical amounts for which start-ups with no revenue, or no users, or even no product are bought, I might not be far off.

But let’s say there is a logical way to value a company. During Bubble 1.0 there seemed to be — at least sometimes. Tech start-ups were valued by the number of eyeballs they attracted. When Broadcast.com was acquired by Yahoo for $5.9 billion in stock in April 1999, it was estimated that the company paid $10,000 per user.

Today, when eyeballs mean much less, how do start-ups with no revenue come up with a valuation? Well, it depends on a buyer’s reason for wanting the company.

One of the growing forms of acquisitions is an acqui-hire, in which a company is bought for its talent.

“If the company has no revenue and no users, then it comes down to the price of each engineer, which on average ranges between $750,000 to $1.5 million per person,” said Sam Hamadeh, chief executive of PrivCo, a firm that follows privately held companies, who noted that such acquisitions were up 91 percent from a year ago. “Facebook certainly pioneered and popularized this phenomenon as it made acquisitions to essentially snuff out competition.”

An investor report released by PrivCo in late March found that 12 of the acquisitions by Facebook last year were of this type. Often Facebook integrated the engineers and then shut the newly purchased company. The report also found that Twitter had acquired eight companies to get their engineering talent. Yahoo, Google, Apple, LinkedIn and Airbnb have also done transactions just for engineers.

Given Mr. Hamadeh’s estimate, we can begin to guess at a start-up’s value if it’s clearly an acqui-hire. If a company has 10 employees, no revenue and no users, it could be worth about $15 million. Throw in the cost of some office equipment, shutting down the technology and paying back investors, and it’s valued at $30 million.

Chris Dixon, a general partner at the venture firm Andreessen Horowitz, said in an interview that although some of the recent start-up acquisition prices might seem high, many are amortized over four years, which makes some deals seem more rational. “If you’re paying $1 million per engineer in an acqui-hire, that’s split up over four years and ends up equaling the salary of other engineers in the Valley,” he said.

But some of these transactions have people scratching their heads — like that of Summly, a news-reading app built by a 17-year-old with two employees, which Yahoo bought for a reported $30 million last month. As Emin Gün Sirer, an associate professor at Cornell, noted, Summly didn’t use any unique technology and has only a couple of employees.

When a company has users and it is a straight-up product acquisition, the numbers can be more difficult to figure out. Amazon recently purchased Goodreads, a social media site built around sharing books, for a sum said to be $150 million. Mailbox, which had not properly begun, sold for $100 million last month to DropBox. And, of course, there is Instagram, which was bought for $1 billion.

Thomas R. Eisenmann, a professor at the Harvard Business School, said that when companies weren’t being acquired just for their talent — like Goodreads and Instagram — three possible calculations were used to determine a valuation. The first requires exploring how much time and effort it would take to build the product from scratch and attract new users. The second is potential cash flow.

The third is “in the realm of, ‘What number do we need to put on the table to convince the management and investors to part with their dream?’ ” he said. “Often, they end up somewhere in the magic middle.”

Of course, all of this math starts to fall apart when a start-up receives an exorbitant amount of press and exposure on social networks. Then suitors become irrational, making the price people are willing to pay seem as if it were plucked out of a hat.

E-mail: bilton@nytimes.com

A version of this article appeared in print on 04/08/2013, on page B7 of the NewYork edition with the headline: The Logic (or Lack of It) In Appraising Start-Ups.

Article source: http://bits.blogs.nytimes.com/2013/04/07/how-deal-makers-put-a-value-on-start-ups-disruptions/?partner=rss&emc=rss

British Newspapers Challenge New Press Rules

In a statement, the newspaper society representing 1,100 newspapers said provisions for fines of up to $1.5 million on errant newspapers would impose a “crippling burden” on cash-strapped publications struggling against the inroads of the Internet.

“A free press cannot be free if it is dependent on and accountable to a regulatory body recognized by the state,” the president of the society, Adrian Jeakings, said.

Indeed, the conservative Daily Mail commented in an editorial, “The bitter irony is this long-drawn out debate comes when the Internet — which, being global, has no regulatory restraints — is driving newspapers out of business.”

“If politicians had devoted half as much of their energies to keeping a dying industry alive, instead of hammering another nail into its coffin, democracy would be in a healthier state today.”

Newspaper proprietors and editors have not so far signed on to the agreement announced on Monday and say they were excluded from late-night cross-party talks on the new code while privacy campaigners clamoring for tighter press controls took part in the deliberations. Some indicated on Tuesday that they would not be rushed into responding to the proposed restrictions.

“We need to go back a long way — to 1695, and the abolition of the newspaper licensing laws — to find a time when the press has been subject to statutory regulation. Last night, Parliament decided that 318 years was long enough to let newspapers and magazines remain beyond its influence, and agreed a set of measures that will involve the state, albeit tangentially, in their governance,” the conservative Daily Telegraph said.

Lawmakers on Monday “urged the newspaper industry to endorse the new dispensation as quickly as possible,” the newspaper said. “However, after 318 years of a free press, its detail deserves careful consideration.”

The agreement announced Monday creates a system under which erring newspapers will face big fines and come up against a tougher press regulator with new powers to investigate abuses and order prominent corrections in publications that breach standards.

The deal, struck in the early hours of Monday, enshrines the powers of the regulator in a royal charter — the same document that sets out the rules and responsibilities of the British Broadcasting Corporation and the Bank of England.

That ended a fierce dispute, which divided the coalition government, over whether new powers should instead be written into law.

The idea of legislation raised alarms among those cherishing three centuries of broad peacetime freedom for Britain’s newspapers. They included Prime Minister David Cameron, who said a law establishing a press watchdog would cross a Rubicon — Caesar’s point of no return — toward government control because it could be amended to be even stricter by future governments that might want to curb the press.

But victims of hacking, the Labour opposition and the Liberal Democrats — the junior partners in the coalition — pointed to the failures of existing self-regulation and pressed for a “statutory underpinning” to enshrine the changes in law. That was in line with a central recommendation of a voluminous report published last November after months of exhaustive testimony into the behavior and culture of the British press at an inquiry by Lord Justice Sir Brian Leveson. His inquiry was called after the hacking scandal crested in July 2011.

There will be minor legislation to accompany the new system. One law will be amended to ensure that changes to the charter — and therefore to the system of press regulation — can be made only if there is agreement by two-thirds of both houses of Parliament. Another change will make news groups that opt out of the new regulatory system subject to higher fines for defamation. Britain’s existing legislation already includes some of the world’s most stringent defamation laws, along with rules governing what may be published on matters relating to national security and judicial procedures.

Stephen Castle reported from London, and Alan Cowell from Paris.

Article source: http://www.nytimes.com/2013/03/20/world/europe/british-newspapers-new-press-rules.html?partner=rss&emc=rss

Macy’s, J.C. Penney and Martha Stewart Living Omnimedia Ordered Into Mediation

If the companies do not reach an agreement before April 8, Justice Jeffrey K. Oing of New York State Supreme Court will continue hearing the case. Representatives for all three companies said they would participate in the mediation process.

Penney agreed on Thursday not to sell any Martha Stewart-designed goods in the categories Macy’s is fighting over — bedding, bath and kitchen — until April 8. Penney has been vague about when it planned to sell those products, telling investors to expect an introduction in May, though its lawyer said this week that they were supposed to be in stores in April.

Macy’s had a contract with Martha Stewart Living Omnimedia giving it exclusive rights to Ms. Stewart’s products in bedding, bath and kitchen. However, in 2011, Penney made a $38.5 million investment in Martha Stewart Living Omnimedia and announced it would be selling those products, too. Penney and Ms. Stewart’s company say they have not violated the Macy’s contract because the Penney products will be in a “store within a store,” and the Macy’s contract allows Ms. Stewart to have products in her own stores.

The companies have been fighting hard to get their way. Macy’s has said it sells about $300 million worth of Ms. Stewart’s goods a year, and Martha Stewart Living Omnimedia gets a 4 percent royalty from that. And Ron Johnson, the chief executive of Penney, said he did not expect any other vendor at Penney to sell as much as Martha Stewart.

This will be the first mediation talks for the companies. Before the trial, Penney and Ms. Stewart’s company were willing to go into mediation, a Penney spokeswoman, Daphne Avila, said, but “other parties were not amenable.” Macy’s declined to comment on prior mediation efforts. Martha Stewart Living Omnimedia said that in advance of the mediation order on Thursday, Ms. Stewart and Macy’s chief executive, Terry Lundgren, “had a productive conversation regarding the ongoing contract dispute between MSLO and Macy’s. We view today’s actions as a positive step forward and welcome a prompt and fair resolution.”

Though contractual disputes are not always dramatic, the trial has been lively, providing a window into corporate strategy and the thinking — and e-mail habits — of powerful executives like Ms. Stewart, Mr. Lundgren and Mr. Johnson, all of whom have testified.

Despite the witness lineup, Justice Oing has shown impatience with the parties. And he appeared to be warning Penney this week, as he and the companies’ lawyers discussed whether he should broaden a preliminary injunction that would stop it from selling Martha-designed products in the contested categories until the case is decided.

Ordering those products for sale in Penney stores “is a risk that your company and your client took without having a judicial determination as to the rights and remedies or liabilities” involved in this case, Justice Oing said.

“Ultimately, you guys’ve played this out,” he said.

Article source: http://www.nytimes.com/2013/03/08/business/judge-sends-macys-penney-case-to-mediation.html?partner=rss&emc=rss

Economix Blog: Health Care Aside, Fewer Jobs Than in 2000



Dollars to doughnuts.

Uwe Reinhardt had a fascinating post Friday about the buffer that health care spending has provided in the last few years. Health care has provided a steady contribution to gross domestic product even as other sectors cut back dramatically. He also notes that in the last two decades, it has created more jobs on a net basis than any other sector.

I’d like to point out one other important accomplishment of the much-maligned health care industry. Not only has it added more jobs than any other sector, but without it, there would actually be slightly fewer jobs in the United States today than in 2000.

In 2000, the economy had about 121 million non-health-care payroll jobs. Today, on a seasonally adjusted basis, there are 120 million non-health-care jobs. Meanwhile, the health care industry has added about 3.6 million jobs in that time frame, growing about 33 percent (14.5 million health care jobs today versus 10.9 million in 2000).

Source: Bureau of Labor Statistics, via Haver Analytics. January 2013 figures are seasonally adjusted; 2000 figures are annual numbers. Source: Bureau of Labor Statistics, via Haver Analytics. January 2013 figures are seasonally adjusted; 2000 figures are annual numbers.

There have been times since 2000 that the country has had more non-health-care jobs on net than it had at the turn of the millennium, but that has not been true since late 2008. Here’s a look at the longer-term monthly numbers. Note that the vertical axis does not go down to zero to better show the change:

Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero, better showing the change over time. Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero, better showing the change over time.

Is it a good thing that the health care industry has been basically keeping the job market afloat? That depends on your perspective.

Health care is a notoriously inefficient industry — in 2008, there were five people performing administrative support for every one doctor — and a lot of the jobs that have been created in recent years probably involve feeding that inefficiency.

Market pressures don’t force streamlining in health care the way they do in other industries. That’s partly because of the way Americans pay for health care and the way the government subsidizes health care consumption. It’s also partly because health care is relatively shielded from international competition, since many medical services are difficult to offshore. It’s hard to have someone draw your blood from India, for example.

In any case, given how weak the economy is right now, it seems unlikely that the health care industry is snatching many workers away from other industries where their skills would be put to more productive use.

Article source: http://economix.blogs.nytimes.com/2013/02/20/health-care-aside-fewer-jobs-than-in-2000/?partner=rss&emc=rss

Nintendo Warns of Weak Wii U Sales

Nintendo has a lot riding on the Wii U, the successor to the Wii, which revolutionized the gaming industry six years ago with a casual approach that brought video games to new audiences. Nintendo is banking on the Wii U to revive its fortunes after the disappointing launch in 2011 of its handheld gaming machine, the 3DS, which forced the company to slash prices to stoke demand.

Nintendo executives had also said the Wii U would prove that dedicated game systems still have a future in a world now teeming with cheaper, more convenient mobile games played on smartphones and tablets.

The latest numbers from Nintendo are not promising. The company said it had sold 3.06 million Wii Us, and said it expected sales to hit just 4 million units through March, almost 30 percent less than a previous projection of 5.5 million.

Nintendo also downgraded its 3DS sales expectations, saying it would sell 15 million units through March, short of its previous forecast of 17.5 million units, and said it expected to sell less gaming software.

Still, the yen weakened in 2012, which lowers costs and bolsters earnings of Japanese exporters. That helped Nintendo return to the black for the first nine months of its business year. Net profit from April to December came to ¥14.55 billion, or $160 million, compared with a ¥48.35 billion loss in the same period last year, the company said in an earnings announcement that painted a mixed picture of its prospects.

The company raised its profit forecast for the business year through March to ¥14 billion, from ¥6 billion. Nintendo does not break out quarterly results.

Article source: http://www.nytimes.com/2013/01/31/technology/nintendo-warns-of-weak-wii-u-sales.html?partner=rss&emc=rss

Hurricane Helps to Lift Auto Sales to 4-Year High

The strong performance of most car companies indicated that total sales for this year would exceed most forecasts and suggested that the industry’s revival would continue into 2013.

Preliminary figures showed that 1.14 million vehicles were sold in November, in contrast to 994,000 in the same month a year ago, according to the research firm Autodata.

That pace translates into a seasonally adjusted annual sales rate of about 15.5 million vehicles — the highest rate recorded since January 2008.

“November was a very good month, but December has the potential to be even better,” said Jesse Toprak, chief analyst for the auto information Web site TrueCar.com.

Analysts said from 20,000 to 30,000 sales during the month were tied to consumers replacing vehicles that were flooded or destroyed in the hurricane that decimated portions of the East Coast in late October.

Estimates of damaged vehicles have run as high as 200,000, but Mr. Toprak said only about one-fourth of those cars would be replaced with new ones.

“The replacement value will in most cases only be enough to replace a used car with another used car,” he said.

The main reasons for the healthy sales in November were the same ones that had driven the overall industry this year — the need to replace aging cars on the road and the steady supply of fresh, new models with superior fuel economy.

General Motors, the nation’s largest automaker, had one of the weaker performances among the major car companies. G.M. said its November sales increased just 3.4 percent, mostly because of a drop in truck sales.

G.M. plans to replace its current pickup trucks next year with new versions, but is losing ground to competitors in the segment in the interim.

The company also did not benefit much from hurricane-related sales because its market share is lower than Japanese rivals in some of the affected areas.

Ford Motor Company reported that its sales during the month were up 6.4 percent, primarily because of the popularity of its small Focus sedan and C-Max hybrid models.

Ford, in fact, trailed G.M. by fewer than 10,000 sales during November, with General Motors selling 186,000 vehicles in contrast to Ford’s 177,000.

Chrysler, the smallest of Detroit’s three carmakers, continued its stellar results this year with a 14.4 percent increase in the month. Over all, Chrysler sold 122,000 vehicles, including 3,600 cars made by its Italian parent company, Fiat.

The two largest Japanese automakers, Toyota and Honda, posted sizable increases that were partly attributed to the replacement of storm-battered vehicles.

Toyota said its November sales jumped 17.2 percent, to 161,000 vehicles, and Honda reported a 38.9 percent increase, to 116,000. Honda’s large market share in New York, New Jersey and Connecticut was cited by analysts as a key factor in its overall results.

“Honda is the most popular brand in the tristate area,” said Jessica Caldwell, an analyst with the car research site Edmunds.com. “So when life returned to normal, those car buyers quickly made up for lost time.”

Nissan, the third major Japanese car company, said its sales increased 12.9 percent during the month, to 96,000 vehicles.

The German automakers Volkswagen and BMW did well in November, partly on the strength of revamped versions of top sellers such as the VW Passat and the BMW 3-series.

Industry executives said positive economic conditions should propel sales even higher next year. In particular, an increase in housing starts has encouraged some businesses to begin buying new pickup trucks and utility vehicles.

The executives, however, said there was some concern about the outcome of discussions in Washington to avert the package of tax increases and spending cuts scheduled to go into effect at the end of the year.

“Until we can see some resolution, we are going to be conservative and not issue a sales forecast for 2013,” said Kurt McNeil, G.M.’s head of United States sales operations.

Article source: http://www.nytimes.com/2012/12/04/business/automakers-report-strong-november-sales.html?partner=rss&emc=rss

Media Decoder Blog: Pandora Posts a Loss but Continues to Expand

A year after going public, the popular Internet radio service Pandora is still expanding rapidly, with growth in audience size and revenue. But Pandora Media, the company behind it, continues to post a loss, as its revenue has not kept up with music royalties and other costs.

Pandora, which lets users create free music streams tailored to their tastes, had $101.3 million in revenue for the three months that ended July 31, a 51 percent increase from the same period last year. That was slightly better than the $100.9 million that analysts had expected, according to Thomson Reuters.

Its results helped Pandora’s shares rise 9 percent in after-hours trading on Wednesday. The stock had closed at $10.08, down 1 percent for the day. The stock is down 37 percent from its opening price in July 2011.

Pandora now has 54.9 million listeners each month. In the last three months they listened to 3.3 billion hours of music, up 86 percent from last year.

Revenue related to use of the service on mobile phones — which counts advertising as well as some revenue from paid subscriptions — was up 86 percent to $59.2 million. A majority of the listening to Pandora is done on mobile phones, although the company has struggled to increase the amount of money it can make from mobile advertising.

“This quarter demonstrated that our mobile monetization strategies are working,” Joe Kennedy, the company’s chairman and chief executive, said in a statement.

But Pandora had a net loss of $5.4 million, or 3 cents a share, for the quarter, its sixth quarterly loss in two years. For the same period last year, the company lost $3.2 million, or 4 cents a share.

Pandora’s largest expense is music royalties, which increase with each listener. For the quarter, it paid $60.5 million, or slightly less than 60 percent of its revenue, in royalties to record labels, artists and music publishers. Its current fee structure is based on a negotiated discount to a rate set by federal statute. And although the next round of royalty negotiations is not expected to begin until 2014, Pandora has already begun lobbying in Washington over its rates.

To offset rising royalty costs, Pandora has been building up local advertising sales teams around the country, and also pushing to be included in ad networks that would put its service into direct competition with terrestrial radio stations.

After withdrawing from many foreign countries several years ago because of music licensing problems, it is now taking its first steps to return to overseas markets, starting with Australia and New Zealand. A regulatory filing last month suggested that Pandora is paying lower royalty rates there than it does in the United States.

“Our dream,” Mr. Kennedy said in a conference call with investors, “is to one day have billions of people listening to Pandora around the world.”

Article source: http://mediadecoder.blogs.nytimes.com/2012/08/29/pandora-posts-a-loss-but-continues-to-expand/?partner=rss&emc=rss

Smartphone Sales Are Strong, but Verizon Has a Loss

Verizon Communications on Tuesday reported rising iPhone sales and revenue growth in its wireless business, but it booked a quarterly loss, primarily because of previously announced pension charges.

The company reported a net loss of $2 billion, or 71 cents a share, for the fourth quarter of 2011, in contrast to net income of $2.64 billion, or 93 cents, in the quarter a year earlier. Revenue climbed 7.7 percent, to $28.44 billion in the quarter, from $26.4 billion in the quarter a year earlier.

Adjusted for the pension charges, the income was 52 cents a share, just below the average forecast of 53 cents from analysts. Revenue was right in line with expectations, according to Thomson Reuters. Shares of Verizon fell 61 cents, to $37.79.

“Verizon finished 2011 very strong, both in terms of revenue growth and by delivering an 18.2 percent total return to our shareholders for the full year, and the company has great momentum for 2012,” Lowell C. McAdam, Verizon’s chief executive, said in a statement.

The company said strong sales of smartphones drove its wireless business to its best quarterly growth rate ever, up 13 percent to $18.3 billion in revenue. Verizon sold 7.7 million smartphones in the fourth quarter, 4.2 million of which were iPhones.

The company added 1.5 million wireless subscribers over the quarter, bringing its total subscriber count to 108.7 million.

“We have great momentum in wireless, and we expect to build on that strength,” said Francis J. Shammo, chief financial officer of Verizon, during a conference call after the earnings report was released.

Profit margins, however, dropped because of the high subsidies that Verizon pays for each new iPhone bought by customers when they commit to a two-year contract.

Wireless carriers subsidize a part of the retail price on most new cellphones to attract customers. The companies recoup the costs over the duration of the customer’s contract.

Verizon said this week that it had a large lead over its rival ATT in the race to build out a newer, faster network called 4G Long Term Evolution, or LTE. The company says it now has LTE networks deployed in 195 markets, compared with ATT’s 26 markets, and it plans to make coverage from such so-called fourth-generation networks as ubiquitous as its older third-generation networks by mid-2013. Verizon said it sold 2.4 million 4G devices in the fourth quarter.

Mr. Shammo added that Verizon’s wireless business intends to expand in the business market, as the company is planning wireless innovations for automobiles, health care and energy conservation.

He said Verizon is advancing its lead in 4G at a time when ATT is trying to obtain more spectrum needed to expand its networks. In one effort to gain spectrum, ATT tried to merge with T-Mobile USA, but eventually withdrew the bid after it faced resistance from government agencies over antitrust concerns.

While ATT was pursuing the merger, Verizon made a deal with a consortium of cable companies, including Comcast and Time Warner, for $3.6 billion worth of spectrum.

Though ATT is far behind in acquiring spectrum, it is not out of the 4G game, said Christopher C. King, a telecom analyst at Stifel Nicolaus. The company still has enough spectrum to deploy its nationwide 4G LTE network.

Verizon’s wireline business, which includes traditional landlines, continued to shrink. Quarterly revenue decreased 1.5 percent, to $10.14 billion.

To Simon Leopold, an analyst at Morgan Keegan, Verizon’s aggressive pursuit of 4G networks symbolizes its continued investment in superior technologies to attract consumers and beat rivals. “ ‘It’s the network’ is not just a tagline with Verizon,” Mr. Leopold said. “It’s something that’s deep within their culture.”

Verizon’s expansion of 4G will probably create new opportunities for makers of networking equipment, like Cisco, Alcatel Lucent and Juniper, meaning consumers can expect a wave of new devices compatible with the faster network in the coming year, Mr. Leopold said.

This article has been revised to reflect the following correction:

Correction: January 24, 2012

An earlier version of this article used net income figures that understated Verizon’s losses. It now uses updated net income figures that show the company lost $2 billion, not $212 million.

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